a. A witness statement of James Edmondson who is a solicitor and was, at the relevant time, head of the Private Client department at Farrer & Co;

b. A witness statement of Jeremy Cline who was a member of the International Private Client team at Farrer & Co at the time of the 2008 Deed but not at the time of the 2014 Deed;

c. A witness statement of Alexandra Hollingshead who is currently an associate in the International Private Client team of Farrer & Co and who was involved in the drafting tangentially of the 2008 and more closely in relation to the 2014 deeds;

d. Two witness statements of the Second Claimant, Mrs Le Poidevin, who is a Private Client Director of the First Claimant which is a trustee of the settlement and who is also a trustee on her own account;

e. A witness statement of Mr Ian Ritchie who is an associate director of the First Claimant ('RBC Trustees') and was involved in giving instructions for the 2014 deed;

a. The trustees exercised their power of revocation contained in clause 14(1) of the 1991 Deed to revoke clauses 4 and 5 of the 1991 Deed concerning Joanna's settled share and Michael's settled share and the income thereof.

b. They then appointed that they would stand possessed of Joanna's Settled Share and Michael's Settled Share upon the same trusts as set out in clause 4 of the 1991 Deed but with the addition referred to below.

c. They added a new sub-clause 4(3) which stated that subject to Michael's life interest, his Settled Share would from the date of the Deed be held upon trust to pay the income to Michael's wife Helen Stubbs during her lifetime.

d. Clause 5 stated that subject to Joanna's life interest, her Settled Share would from the date of the Deed be held upon trust to pay the income to Joanna's husband John Laing during his lifetime.

e. Clause 6 of the Deed stated that subject to the aforesaid, the trusts powers and provisions declared and contained in the Settlement would continue to apply to Michael's Settled Share and to Joanna's Settled Share and its income.

In March 2006 some important changes were made to way inheritance tax applies to interests in possession in settled property. The changes largely abolished the interests in possession regime in respect of interests in possession created on or after 22 March 2006 by the interposition of new subsections in section 49 of the IHTA and new sections added after section 49. The effect of these changes is that, subject to limited exceptions, interests in possession created on or after 22 March 2006 do not result in the beneficiaries entitled to them being treated as the beneficial owner of the settled property. That in turn means that the termination of a post-2006 interest in possession followed by the creation of a new interest in possession would, subject to limited exceptions, result in an immediate charge to inheritance tax. However, where an individual continues to have a qualifying interest in possession created prior to 22 March 2006, he or she continues to be treated as beneficially entitled to the property.

The changes in 2006 also introduced the concept of the transitional serial interest in section 49D of the IHTA. That had the effect that if the Settled Shares had remained as they were in 2004, the Settled Shares would still have benefited from the exemption from inheritance tax for the future assuming that Joanna and Michael had still been married to John and Helen at the date of death.

"I would suggest that the solution to this uncertainty is to revoke the 2004 Appointment in respect of either successive life interest or revoke the whole of the 2004 Appointment [and replace it] with a new appointment providing that only a widow of Michael or widower of Joanna will be entitled to a successive life interest."

"In June 2007 Jim [Edmondson] drafted a Deed of Revocation and New Appointment which removed Joanna Laing's soon to be ex-husband as the successive life tenant on her share of the Janatha Stubbs Settlement of 1964. Joanna has now decided that she wants to proceed with this and would like the Deed in place before she meets with the lawyers to discuss the divorce settlement on 6 August.

I have attached Jim's Deed which I have made some amendments to, mainly to reflect the fact that Abacus (C.I.) Limited underwent a merger and is now called RBC Trustees (CI) Ltd. Could you please have a look at the Deed to ensure it is okay to use and also confirm that it is still okay to use the terms "trustees" in listing the Deeds on page 1, now that the Trustees name has been altered from Abacus to RBC?"

"I should reiterate the point made in Jim's email of 22 June 2007 that the Deed will re-expose the Fund to inheritance tax. Liz Le Poidevin's email of 15 June 2007 refers to insurance – has anything been done in relation to this?"

"The attached letter … requests the Trustees revoke Helen Stubbs follow on interest. Given the circumstances and purpose of the Trust the Trustees would consider this in the best interests of the beneficiaries. As written confirmation from Janatha Stubbs is required during her lifetime, and presumably [she] will be party to the deed as before – is this deemed to be written consent or should the Trustees request a formal letter from her prior to proceeding"

"We are sure we do not need to remind the trustees that if they choose to exercise their power of revocation, Michael's current life interest must not be effected or altered in any way otherwise this would have adverse tax consequences particularly for Inheritance Tax."

a. First, there is an immediate charge to inheritance tax of 20% of the value of the Fund on the creation of the Deed payable out of the settled property. This is because the Fund is governed now by what is called the "relevant property" regime in Part 3 of the IHTA.

b. Once the property is in the relevant property regime, it is no longer treated as being beneficially owned by a beneficiary who has an interest in possession. Instead a charge to tax is imposed on its value every 10 years under s 64 of the IHTA.

c. If property leaves the relevant property regime in between the 10 year anniversaries, a proportionate charge is imposed under s 65 of the IHTA.

HMRC has chosen not to take an active role in the proceedings. In their letter of 21 July 2016 they say that they will not join in the application on the understanding that the Court is referred to the case of Racal Group Services Ltd v Ashmore [1995] STC 1151 ('Racal') and the authorities discussed by the Court of Appeal in that case and also to Allnutt v Wilding [2007] EWCA Civ 412 ('Allnut'). I have read those two judgments.

" … rectification is about putting the record straight. In the case of a voluntary settlement, rectification involves bringing the trust document into line with the true intentions of the settlor as held by him at the date when he executed the document. This can be done by the court when, owing to a mistake in the drafting of the document, it fails to record the settlor's true intentions. The mistake may, for example, consist of leaving out words that were intended to be put into the document, or putting in words that were not intended to be in the document; or through a misunderstanding by those involved about the meanings of the words or expressions that were used in the document. Mistakes of this kind have the effect that the document, as executed, is not a true record of the settlor's intentions."

The kind of evidence that is relevant to establishing the subjective intention of the trustees was discussed in Day and another v Day [2014] Ch 114. In that case a mother granted a general power of attorney to a solicitor. The solicitor executed a conveyance of her home, declaring that the property was to be held by herself and her son as beneficial joint tenants. On her death, the son became the sole legal and beneficial owner of the property by survivorship. The mother's five other children sought rectification of the conveyance. They were the beneficiaries under the mother's will which directed that the property be sold and the proceeds divided equally among her children. The claimants alleged that the conveyance had been executed in order to enable funds to be raised for the benefit of the son with the property being used as security; it had been no part of the agreement between the mother and son that he should acquire any beneficial interest in the property. The recorder found that the mother had never intended to give and never thought that she had given a beneficial interest in the property to the defendant. She always thought that once the borrowings had been repaid, the property would be entirely hers again to dispose of in her will. He held that there was no evidence that the mother had given the solicitors any instructions but she had granted the power of attorney so as to enable the son to proceed with raising money by mortgage whilst she was travelling abroad. The recorder dismissed the claim for rectification on the grounds that the grant of the general power of attorney precluded any right to rectification.

"22. What is relevant in such a case is the subjective intention of the settlor. It is not a legal requirement for rectification of a voluntary settlement that there is any outward expression or objective communication of the settlor's intention equivalent to the need to show an outward expression of accord for rectification of a contract for mutual mistake. … Although, as I have said, there is no legal requirement of an outward expression or objective communication of the settlor's intention in such a case, it will plainly be difficult as a matter of evidence to discharge the burden of proving that there was a mistake in the absence of an outward expression of intention."

The Claimants also rely on the witness statements of the people involved at the time. None of them was called for cross examination so their evidence was not challenged. Nonetheless I accept Ms McDonnell's submission that the court must evaluate the quality of the evidence by looking carefully at the evidence to see precisely what the witnesses say. The evidence that is relevant is evidence as to what they actually thought and intended at the time, not what they now wish they had thought or now wish that they had intended, in the light of the unintended consequences of their actual thoughts and intentions. Ms McDonnell also points out that the true effect of the document is very clear on the face of the Deeds themselves. This is not a claim relating to some obscure sub-clause hidden away in a long document. Although there is some force in that argument, it is also true to say that the Deeds are drafted in technical language. What was happening may jump off the page for an experienced trust lawyer, but it would not be apparent to a lay person, even one who was a trustee of the settlement.

That is not, in my judgment, a correct reading of the correspondence. The choice that Mr Cline was putting to the trustees was not about the mechanism to be used to remove the spouses' interests. It was a choice between a simple removal of any reference to spouses at all from the trusts or substituting for the named individuals a generic reference to a widow or widower. It is true that he referred to achieving the first by a revocation of the spousal interests and the second by a revocation and reappointment of the whole 2004 Trust. But it is clear that of the two options put forward, it was the former that the trustees preferred because neither the 2008 nor the 2014 Deed refers to a widow or widower – they simply remove the reference to any successor interest.

"My instructions to Mr Edmondson were to draft a deed to revoke John's follow-on life interest, but not to revoke Joanna's qualifying interest in possession. I would have reviewed the draft deed to check that, from a trust law perspective, it achieved the desired result of revoking John's follow-on life interest, which it did. However, I did not apply my mind to the precise mechanics of how this was to be achieved, and I do not believe that I appreciated that the deed would revoke Joanna's interest as well as John's and effect a reappointment of it. I simply assumed that the draft deed complied with the instructions. Had I appreciated that the deed revoked and reappointed Joanna's interest, I am sure that I would have queried it, if only to confirm that it would not have any wider implications from a trusts or tax perspective."

"19. I am unable to accept the trustees' submission on the availability of rectification in this case. The position is that the settlor intended to execute the settlement which he in fact executed, conferring benefits on his three children. The settlement correctly records his intention to benefit them through the medium of a trust rather than the alternative of making direct gifts in their favour. I am unable to see any mistake by the settlor in the recording of his intentions in the settlement. The mistake of the settlor and his advisers was in believing that the nature of the trusts declared in the settlement for the three children created a situation in which the subsequent transfer of funds by him to the trustees would qualify as a PET and could, if he survived long enough, result in the saving of inheritance tax.

20. That sort of mistake about the potential fiscal effects of a payment following the execution of the settlement does not, in my judgment, satisfy the necessary conditions for grant of rectification. The mistake did not result in the incorrect recording of his intentions. I think that the judge put it well when he said the following in paragraph 23 of his judgment:

"23. The case is therefore one in which I find that Mr Strain [that is, the settlor] intended to execute a settlement in exactly the form that Mr Wilding [that was the solicitor] drafted. Insofar as he was labouring under any sort of mistake when he did so, his mistake was not as to the language, terms, meaning or effect of the settlement. The only mistake was that a payment of the £550,000 to it would be a potentially exempt transfer.

"24. In my judgment a mistake of that nature is not one which the court has any jurisdiction to rectify. Since, for the reasons given, Mr Strain must be assumed to have understood the meaning of the fact of the substantive trust the powers of the settlement he executed and to have intended to execute a settlement in that form and having the legal effect it did, there is no error in the drafting of the settlement or in his understanding of it that calls for correction. Mr Strain's only mistake was in relying in Mr Wilding's implicit advice that the payment of money to that settlement would be a potentially exempt transfer. That was wrong and apparently negligent advice, but in the circumstances of the case the remedy of rectification is not available to cure the damage it has caused."

21. I agree with the judge's analysis of the position. I would therefore reject the ground of appeal which asserts that the judge erred in taking too narrow a view of the law of rectification and in rejecting the claims of the trustees."

I do not agree that this case falls into the same category as Allnutt. Here the mistake is not just about the fiscal consequences of what the Deeds achieved but about the scope of the changes to the 2004 Deed that would be made. It is not the case that, for example, Joanna and Michael's trusts were revoked and re-appointed because it was thought that that would have some particular tax effect which did not, because of the drafting, in fact arise. Rather it was not intended or thought that the Deeds would affect their interests in any way, only that their spouses' interests would be removed. I recognise that if there had not been the adverse tax consequences Mr Wilson has described, the parties might not have thought it was worth coming to court to apply to rectify the Deeds. But the need for rectification can be made out here without having to refer to the tax consequences of the mistake. The mistake in the sense of a mismatch between the trustees' intention and the effect of the Deeds exists independently of the fiscal consequences even though the motivation in seeking the remedy from the court is based on those consequences. That was not the case in Allnutt; there the mistake could only be explained by reference to the tax consequences of the arrangement that the parties had intended to make and had in fact made.

(c) The need for a specific intention to achieve something different from what was done

"that there is an issue capable of being contested, between the parties or between a covenantor or a grantor and the person he intended to benefit, it being irrelevant first that rectification of the document is sought or consented to by them all, and second that rectification is desired because it has beneficial fiscal consequences. On the other hand, the court will not order rectification of a document as between the parties or as between a grantor or covenantor and an intended beneficiary, if their rights will be unaffected and if the only effect of the order will be to secure a fiscal benefit."

Ms Meadway helpfully drew my attention to other potential practical effects of the change from an interest deriving from the 2004 Deed and interests deriving from the 2008 and 2014 Deeds. She referred me to the Trusts (Capital and Income Act) 2013. This alters the treatment of income as it arises in trusts by abolishing the statutory rules of apportionment. But it retains the old rules for trusts which do not fall within the definition of "new trusts". New trusts are those arising on or after the date when section 1 of the Act comes into force which was 1 October 2013. So the 2014 Deed may be affected by this legislation if it is regarded as creating a trust after that date. There may well be other legislation currently on the statute book which will affect these trusts differently depending on whether they are 2004 or 2008/2014 trusts.